FOREX TECHNICAL ANALYSIS: CURRENCY MASH UP: NEW DEVELOPMENTS IN GREEK CRISIS, FED INTEREST RATE
EUR/USD
Forex Technical Analysis: United States’ currency declined for a third week against the euro and key resistance was threatened as the Fed lower the expectations for a rate hike; however, the Eurozone is dealing with its own problems and overall the pair’s movement is choppy.
Technical Outlook
The resistance at 1.1450 is an important hurdle which if surpassed will most likely bring in additional buyers. Price is trading above the 50 period Exponential Moving Average and above a bullish trend line but as long as resistance is not broken, reversals are a distinct possibility. On a daily chart price lacks momentum and candles show long wicks which is a sign of weakness and this suggests that a move south is in order if 1.1450 is not broken soon.
Fundamental Outlook
Eurogroup and International Monetary Fund representatives including ECB President and IMF Managing Director Christine Lagarde will meet Monday in another attempt to put an end to the Greek negotiations regarding a potential default on Greek loans. The Forex market will be heavily affected by the outcome of the talks and we expect a very volatile session.
Tuesday Federal Open Market Committee member Jerome Powell will speak about Fed’s decision regarding the rate hike. Hopefully he will shed some light on the timing of such a hike and if this is the case, the US Dollar will react strongly.
Wednesday the currency market will be influenced by the German IFO Business Climate, a survey of about 7,000 businesses across Germany, which asks respondents to rate current economic conditions and to offer their expectations for the next 6-month expectations. The same day the Final version of the American GDP is released; although this version has the lowest impact out of the three, the release can still have a hefty influence on the greenback. The final two days of the week lack major events so probably the direction established in the beginning of the week will prevail.
GBP/USD
The Pound benefited from optimistic economic data last week – an increase in wages and in retail sales – so the pair climbed above 1.5800 zone of resistance. A weak Dollar had almost no answer and the entire week was bullish.
Technical Outlook
Resistance is broken but the Relative Strength Index and the Stochastic both show overbought conditions, making us anticipate a move lower which will find support at 1.5800. A break of this potential support zone would imply that a deeper retracement is coming but we expect bullish price action to continue after bearish pullbacks. The Eurozone fundamental scene will have a deep impact on price action this week.
Fundamental Outlook
The United Kingdom didn’t schedule major news releases for the week ahead and the only notable indicators are the CBI Industrial Order Expectations (Tuesday), The Mortgage Approvals (Wednesday) and a speech of Governor Carney scheduled Friday. Except for the speech the indicators are considered low-impact but surprising numbers can still move the pair.
FOREX TECHNICAL ANALYSIS: DEADLOCKS, DEADLINES AND THE 4TH OF JULY
EUR/USD
Forex Technical Analysis: Last week was characterized by extremely choppy price behavior on all but one of the trading days. The deadlock between Greece and its creditors was still not solved and now Prime Minister Tspiras is making plans for a referendum which will show the Greek people’s opinion on accepting or refusing the creditors’ demands.
Technical Outlook
Price action is still governed by the Greek debt crisis as we saw last week. The pair is just moving back and forth in a tight range but this is probably going to end this week, especially because the 30th of June is the deadline for a part of the Greek debt to be paid. The 50 period Exponential Moving Average, the bullish trend line and the support at 1.1100 form a confluence zone which, if broken, will generate an extended move lower. On the other hand, a bounce here would open the door for a touch of 1.1450.
Fundamental Outlook
The first event of the week is the release of the German Preliminary Consumer Price Index, scheduled Monday and followed Tuesday by the Eurozone Consumer Price Index. These are gauges of inflation and as we know, the ECB considers current levels too low and tries to raise them for some time now. The U.S. Consumer Confidence survey is released Tuesday as well; this is a leading indicator of consumer spending because as long as people are confident about economic conditions, they spend more.
Wednesday’s main event is the release of the U.S. Manufacturing PMI which is a survey of about 400 purchasing managers from the manufacturing sector which acts as a leading indicator of economic health. The release with the highest impact of the week will be the U.S. Non-Farm Employment Change, scheduled Thursday. This is considered by far the most important jobs related data for the American economy and almost always has a huge impact on the US Dollar. Usually it is released in the first Friday of the month but this Friday the United States celebrate Independence Day so the NFP is released one day earlier.
GBP/USD
The Pound had a bearish week, retracing below 1.5800 and negating what seemed to be a clean bullish break of the mentioned level. The last few days were characterized by jerky movement, affected to some extent by the Greek deadlock.
Technical Outlook
If the pair remains below 1.5800 and the level turns into resistance once again, we expect another week of bearish price action. The Stochastic has crossed downwards, coming out of overbought territory and the Relative Strength Index is also coming down after reaching overbought, increasing the chances of bearish movement. However, keep in mind that from a medium term perspective, the pair is in an uptrend.
Fundamental Outlook
United Kingdom’s Current Account (difference in value between imported and exported goods) is released Tuesday, followed Wednesday by the Manufacturing PMI, Thursday by the Construction PMI and Friday by the Services PMI. These are leading indicators of economic health, derived from the opinions of purchasing managers from the respective sectors; the impact on the Pound differs, depending on the difference between forecast and actual numbers. As always the U.S. events will have a direct impact on the movement of the pair.
WEEKLY ANALYSIS: IN THE SHADOW OF THE BAILOUT VOTE
EUR/USD
Last week was characterized by irregular movement as Greece failed to meet a deadline for an International Monetary Fund loan payout and the Greek Prime Minister called for a bailout referendum that will probably affect this week’s movement.
Technical Outlook
The Greek referendum will influence the week’s price action but currently our view is neutral considering the delicate geopolitical environment. If the zone between 1.1100 and 1.1000 can be broken decisively, we might experience an extended move towards 1.0820, otherwise the resistance at 1.1450 is the next target.
Fundamental Outlook
Monday’s headline is the release of the U.S. Non-Manufacturing PMI which is a leading indicator of economic health based on the opinions of purchasing managers outside the manufacturing sector. Tuesday the U.S. Trade Balance comes out, showing the difference in value between imported and exported goods, but Wednesday will probably be the most important day of the week for the greenback as the Fed will release their Meeting Minutes. The next rate hike remains a crucial issue for the dollar trend and the Minutes can contain clues about a potential increase.
The last two days of the week are slow but Friday Fed Chair Yellen will deliver a speech about economic outlook, possibly generating strong movement.
GBP/USD
Overall we had bearish price action last week and the pair managed to break the upwards trend line, approaching the 50 period Exponential Moving Average.
Technical Outlook
Price is approaching 1.5500 and the 50 period Exponential Moving Average which will act as a support barrier. If this zone can be broken early during the week, the move might extend into 1.5200 but a quick move above the bullish trend line will make 1.5800 the first target. The oscillators are still bearish, increasing the chances of a move south.
Fundamental Outlook
The British Manufacturing Production is released Tuesday and the same day an estimate of the Gross Domestic Product comes out. The accuracy of this estimated value is usually high and so is the impact on the Pound. The BOE will announce Thursday the Official Bank Rate but no change is expected from the current 0.50% so the impact will be limited unless surprises occur.
WEEKLY ANALYSIS: GREECE’S BUMPY JOURNEY STILL NOT OVER
EUR/USD
Weekly Analysis: At the end of a back and forth week, filled with reversals and choppy price action, Greek Prime Minister Tsipras presented his creditors and European Leaders with a bailout proposal that could end the deadlock and unlock additional funds.
Technical Outlook
The bailout proposal still has to get approval from EU Leaders and creditors (not approved at the time of writing) and the effects will most likely reverberate throughout this week’s price action. An end of this showdown may strengthen the euro and take the pair above 1.1450 but the first barrier is represented by the bullish trend line which can offer resistance if touched from below. To the downside, support is located between 1.1100 – 1.1000, followed by 1.0820.
Fundamental Outlook
Monday’s price action will be probably governed by the results of Greek negotiations and Tuesday’s main event on the euro side will be the release of the German ZEW Economic Sentiment, which is a survey derived from the opinions of about 275 analysts and professional investors regarding the 6-month outlook for German economy. The same day the U.S. Retail Sales are released, with a potentially high impact on the American Dollar considering that sales made at retail levels represent the major part of overall consumer spending.
Wednesday Fed Chair Yellen will testify on monetary policy before the House Financial Services Committee and Thursday she will do the same but before the Senate Banking Committee, in Washington DC. The same day the ECB will announce the interest rate which is not expected to change but Mario Draghi’s press conference that follows will most likely create a lot of volatility.
Friday the U.S. Consumer Price Index comes out, followed later in the day by the University Of Michigan Consumer Sentiment survey. All indicators and events are considered high impact so the greenback is set for a busy week.
GBP/USD
Last week the pair remained below the bullish trend line and moved below support but most of the bearish advances were erased during the last day of the week.
Technical Outlook
The latest climb can be considered a re-test of the recently broken support which could now turn into resistance. The 50 period Exponential Moving Average is also close to current price and will offer some resistance but the oscillators show bullish signs so we might see a breakout above 1.5500. If this is the case, the first resistance is located around 1.5800.
Fundamental Outlook
The week ahead is slow in terms of economic releases, with the only notable events being the British Consumer Price Index scheduled Tuesday and the Claimant Count Change scheduled Wednesday. The first indicator measures inflation while the second tracks changes in the number of unemployed people and both are considered to have a high impact on the Pound. As always, the U.S. events will have a direct and strong impact on the pair throughout the week.
FOREX TECHNICAL ANALYSIS: BEARS, BULLS AND A PINCH OF GREEK BAILOUT DISTRESS
EUR/USD
Without a doubt the biggest event of the last week was the agreement on a third Greek bailout, which came after months of tension and back and forth talks. However, the euro lost its appeal to traders and the pair traveled south the entire week.
Technical Outlook
The downside momentum seen last week is likely to continue throughout this week but the bears must first break the support at 1.0820. Lately the pair’s movement has been very choppy so we might see a bounce or a break but we slightly favor the south side considering that the Euro Zone is shaken by the Greek crisis and both the Stochastic and Relative Strength Index are well directed downwards without being oversold. If 1.0820 is surpassed the next target is 1.0660 while to the upside, 1.1000 is the first resistance.
Fundamental Outlook
The week ahead is very slow in terms of macroeconomic indicator releases, with the first 2 days being almost completely quiet. Wednesday the U.S. Existing Home Sales come out, showing the annualized numbers of houses sold during the previous month (excluding new buildings). Thursday the U.S. Unemployment Claims cone out as usual, tracking changes in the number of jobless people in the United States.
Friday will be the busiest day of the week as the German Manufacturing PMI is released and later in the day the U.S. Manufacturing PMI comes out. These are leading indicators of economic health based on the opinions of purchasing managers from the manufacturing sector and usually a higher number is beneficial for the currency but the impact is limited if the actual number is close to analysts’ expectations. The same day the U.S. New Home Sales are released, offering further insights into the American house market.
GBP/USD
The Pound strengthened last week when Bank of England Governor Mark Carney mentioned that a rate hike may be closer than expected but the impulse couldn’t be continued and the rest of the week lacked substantial movement.
Technical Outlook
The pair is now trading above 1.5500 and above the 50 period Exponential Moving Average so the bulls have more control than the bears, making us anticipate further upside movement, possibly into the resistance at 1.5800. The candles corresponding to the last three trading days show long wicks on both sides, suggesting indecision; probably during the first days of the week we will see a strong move which will decide the direction for the week.
Fundamental Outlook
Similar to the euro and the dollar, the pound has a slow economic week, with the busiest days being Wednesday when the Bank of England will release the breakdown of the votes on the latest interest rate and Thursday when the Retail Sales come out. A major part of the overall economic activity is represented by sales made at retail level, hence more sales suggest a thriving economy and usually strengthen the pound. As always, the U.S. events will have a direct impact on the pair’s direction.
WEEKLY ANALYSIS: BIG WEEK FOR THE U.S. DOLLAR – ALL EYES ON FED’S MEETING
EUR/USD
Weekly Analysis: Last week the pair bounced at 1.0820 but price action lacked momentum and the bulls didn’t manage to break first resistance.
Technical Outlook
The pair is still standing below the 50 period Exponential Moving Average and below the resistance zone created between 1.1000 and 1.1100. Also, the bearish trend line seen on the chart above can provide good resistance if touched so we are dealing with a strong confluence zone which will be tough to break to the upside. If a break does occur, the next level of interest is 1.1450 and a bounce lower would make 1.0820 the first target, followed by 1.0660.
Fundamental Outlook
The week ahead is busy, with the first important event being the release of the American Durable Goods Orders scheduled Monday. The indicator tracks changes in orders for goods with a life expectancy of more than 3 years; these goods are usually more expensive than regular ones and an increase in such orders suggests economic expansion, hence a stronger dollar.
Tuesday’s main event is the release of the American Consumer Confidence survey. If confidence levels increase, spending levels might increase in the future, strengthening the US Dollar so a higher value can take the pair lower. Wednesday the Fed will announce their rate decision and will issue a statement that will offer insights into the reasons which stood behind the decision. No change is expected but hints about a late 2015 rate hike may generate strong moves.
Thursday the focus remains on the US Dollar as the United States release the Advance Gross Domestic Product which is the main gauge of an economy’s overall performance. The economic week ends Friday with European inflation data in the form of the Consumer Price Index Flash Estimate. A higher value is considered beneficial for the euro and could send the pair north.
GBP/USD
The pair showed mixed price action last week, with the strongest movement being generated by a worse than expected value of the British Retail Sales which triggered Pound weakness.
Technical Outlook
The bears are now struggling to break 1.5500 and the bullish trend line seen on the chart above. First resistance is located at 1.5765 and a break of either zone we mentioned will most likely trigger an extended move in that direction. For the moment we have a lower high on the Daily chart and the Stochastic has crossed downwards, increasing the chances of bearish moves.
Fundamental Outlook
The British Preliminary Gross Domestic Product is the week’s only notable release on the Pound side. It’s scheduled Tuesday and a hefty increase is anticipated so we might see strong movement on the pound-dollar pair. As always, the U.S. events will have a direct impact on the pair’s behavior.
WEEKLY ANALYSIS: NON-FARM PAYROLLS WEEK – US DOLLAR LOADS UP FOR A BIG JUMP?
EUR/USD
Weekly Analysis: Last week the Fed gave minor hints that we may see a rate hike this year and the U.S. Gross Domestic Product increased significantly but despite all this the pair did not have unidirectional movement and we saw sharp reversals.
Technical Outlook
On a Daily chart the pair is still trading below a bearish trend line, below the 50 period Exponential Moving Average and the last daily candle shows long upper wick which is a sign of rejection. Also, the bulls tried twice last week to break 1.1100 resistance but failed. All these are bearish signs that make us believe that price will head lower this week but considering the way the pair has been moving lately, we cannot exclude another move higher. Key support sits at 1.0820 while resistance is located at 1.1100.
Fundamental Outlook
The euro has a slow week ahead so most of the focus will be on the US Dollar. The first notable event of the week is the release of the U.S. Manufacturing PMI, scheduled Monday; it’s a leading indicator of economic health which can strengthen the greenback if it posts a higher than anticipated value. Tuesday is a calm day for both the euro and the dollar while Wednesday the U.S. Trade Balance is released, showing the difference between imported and exported goods and services. The same day Automatic Data Processing Inc. will release their version of the Non-Farm Employment change, a report which tries to mimic the Government data that comes out 2 days later.
The final and most important event of the week comes Friday in the form of the Non-Farm Payrolls which is the primary gauge of employment in the United States and has a huge impact on the US Dollar. Expect strong movement at the time of the release and dollar strength if the jobs market shows signs of improvement.
GBP/USD
The pair had a very choppy week, with price climbing to resistance and then showing multiple signs of weakness and indecision.
Technical Outlook
We saw a bounce at the bullish trend line, which resulted in a climb into 1.5675 resistance but the last three days have been extremely choppy, with long wicks and small bodies. The 50 period Exponential Moving Average is almost flat but still below price so it can offer support together with the bullish trend line. Our bias is neutral until we will see a clear break of either 1.5675 resistance or the bullish trend line.
Fundamental Outlook
The first British release of the week is the Manufacturing PMI scheduled Monday, followed Tuesday by the Construction PMI and Wednesday by the Services PMI. These are all leading indicators of economic health, focused towards their respective sectors and usually have a medium impact on the Pound. The most important day of the week will be Thursday when the Bank of England will release their Inflation Report and will announce the Interest Rate decision (no change expected from the current 0.50%). Later in the day BOE Governor Mark Carney will hold a press conference discussing the Inflation Report so we are in for a day with high volatility.
Friday no major UK events are scheduled but the U.S. Non-Farm Payroll will have a direct and strong impact on the pair’s movement.
WEEKLY ANALYSIS: DOLLAR PICKS UP SPEED AS THE FED MOVES CLOSER TO A RATE HIKE
EUR/USD
Weekly Analysis: Last week European news announcements were scarce and American data was mixed, creating yet another period of indecision and choppy price action.
Technical Outlook
After moving to the downside in the beginning of the week, the pair reversed, without reaching the support at 1.0820. Resistance is located at 1.1000 but the next direction is uncertain, considering the way the pair has been behaving lately; the oscillators don’t show an extreme condition and are just offering mixed signals (Stochastic crossed bearish and RSI is moving upwards). There has been speculation about the Fed raising rates in September so if this week we will get further hints about this, we might see a breakout.
Fundamental Outlook
Monday is a slow day for both the euro and the dollar and Tuesday the German ZEW Economic Sentiment survey is released, showing the opinions of 275 professional investors and analysts about the condition of the German economy. Usually this optimism indicator has a strong impact on the euro and acts as a leading indicator of economic health.
Wednesday we have a calm day again but Thursday the U.S. Advance Retail Sales are released; the indicator could contribute to speculation about a rate hike if higher than expected values are posted so it could be very important for short-to-medium US Dollar strength.
Friday the German Preliminary Gross Domestic Product is released, showing the performance of the German economy which is one of the most important in the European Union. The other event of the day is the release of the University of Michigan Consumer Sentiment survey; a confident consumer usually spends more so higher values are viewed as bullish for the dollar.
GBP/USD
After a slow start of the week, the pair picked up speed and finally broke out of the tight range it was in. The Bank of England did not move as close to a rate hike as some have anticipated and the Pound weakened overall.
Technical Outlook
The support at 1.5500 was finally breached and last week closed with price below it. However, the last daily candle shows a long wick in its lower side, suggesting rejection so the break cannot be considered true yet, especially because lately the pair has been characterized by a lot of reversals and choppy movement. The 50 period Exponential Moving Average can offer the first resistance, followed by 1.5675 while the first support is located at 1.5330.
Fundamental Outlook
The week ahead is very slow for the Pound from a macroeconomic point of view, with the only notable indicators being released Wednesday: the Claimant Count Change and the Average Earnings Index. The first indicator tracks changes in the number of unemployed people who ask for social aid and the second indicator shows changes in the pay received by employees. A lower number of unemployed people is beneficial for the economy and a higher pay for labor is a leading indicator of consumer inflation so it can strengthen the Pound because current inflation levels are considered too low. As always, the U.S. releases will have a direct impact on the pound-dollar pair.
WEEKLY ANALYSIS: U.S. INFLATION AND FED RATE HIKE RUMORS STEAL THE SHOW
EUR/USD
Weekly Analysis: Last week we saw stronger movement than we’ve become accustomed to see from the pair lately. The euro strengthened on optimism regarding the Greek bailout and an end to the crisis, taking the pair above resistance.
Technical Outlook
The zone of resistance created by 1.1000 and 1.1100 proved hard to break in the past and all moves outside were quickly reversed. Now price has moved once again outside the zone but it seems to have trouble breaking 1.1215 and last week we saw a bounce at this level. Once and if 1.1215 is broken to the upside, the pair is likely to move into the next resistance located at 1.1450, while a move below 1.1100 would open the door for another drop towards 1.0820.
Fundamental Outlook
Monday no major releases are scheduled and Tuesday the only notable indicator is the U.S. Building Permits. Wednesday however, will be a very important day because we will get insights into the U.S. inflation with the release of the Consumer Price Index and also the Fed will release the Minutes of their latest meeting. This is a very important document because it usually offers hints about the next rate hike and traders around the world analyze its contents to decide the next direction.
Thursday the U.S. Existing Home Sales come out, together with the Unemployment Claims and Friday focus shifts on Europe for the release of the French and German Manufacturing PMIs which are leading indicators of economic health derived from the opinions of purchasing managers from the Manufacturing sector.
GBP/USD
After what appeared to be a break of support, the pair rebounded early last week and the bullish impulse continued, with price approaching 1.5675, showing that the ranging period is still not over.
Technical Outlook
Price is still trapped between 1.5500 support and 1.5675 resistance, with daily candles showing long wicks in their upper and lower side, which is a sign of indecision. However, the pair is trading above the 50 period Exponential Moving Average and this is a bullish sign so we may see a break of 1.5675 early in the week. If this is the case, the move is likely to extend into 1.5800 resistance or at least to continue until the oscillators become overbought. A bounce at resistance would make 1.5500 the first target.
Fundamental Outlook
Two major indicators are released this week by the United Kingdom: the Consumer Price Index (main gauge of inflation) comes out Tuesday, followed Thursday by the British Retail Sales which account for the major part of economic activity. Considering the importance of these indicators and the U.S. releases, we expect this week a move outside the range the pair has been trapped in.
WEEKLY ANALYSIS: EURO SOARS, DOLLAR UNABLE TO RESPOND, POUND STILL IN LIMBO
EUR/USD
Weekly Analysis: The euro had an easy week against the US Dollar as the greenback suffered from back and forth speculation on a possible rate hike. German’s policy makers approved the third Greek bailout with overwhelming majority, contributing to euro strength.
Technical Outlook
The resistance at 1.1215 was decisively broken as price moved strongly to the upside for the last three days of the last week and now the key level at 1.1450 is threatened. However, price traveled almost 350 pips without even the smallest retracement, a behavior not seen in a long while, so we expect a move to the downside that should be considered a pullback, not a reversal. This move is likely to occur once 1.1450 is touched considering that the Relative Strength Index is entering overbought but it’s still pointing upwards, suggesting that price will still move to the upside before retracing.
Fundamental Outlook
Monday there are no special indicators scheduled for release but Tuesday things pick up with the release of the German IFO Business Climate and the U.S. Consumer Confidence. Both are leading indicators of economic optimism, the first being derived from the opinions of about 7,000 German businesses and the second is based on the outlook of about 5,000 households.
Wednesday’s highlight is the release of the U.S. Durable Goods Orders (goods with a life expectancy of at least 3 years) and Thursday the U.S. Preliminary Gross Domestic Product comes out. This is the broadest measure of an economy’s performance and its importance is increased by the fact that the Fed is closely monitoring such indicators in order to time a rate hike.
Friday European inflation takes center stage as the German Preliminary Consumer Price Index comes out. Inflation in the EU has been too low for quite a long period and the German economy is one of the most important for overall inflation so an increase suggests that the inflation of the entire zone could pick up.
GBP/USD
Inflation improved in the United Kingdom but Retail Sales dropped, generating mixed movement with a slightly bullish bias. The pair is still struggling to break resistance but neither side is in clear control.
Technical Outlook
The daily candles show long wicks and small bodies so it’s clear that the pair is still surrounded by indecision. Although the resistance at 1.5675 has been breached several times last week, we still haven’t seen a strong candle that closed above it so a move south still has a high probability of occurring. The Stochastic has reached overbought and is curving downwards, increasing the chances of a drop; if this happens, the 50 period Exponential Moving Average will be the first target, otherwise the pair is likely to move into 1.5800.
Fundamental Outlook
The Pound has a slow week ahead as the United Kingdom didn’t schedule major news releases except the Second Estimate Gross Domestic Product which comes out Friday. This is the main gauge of overall economic performance and it’s the second version out of the three (Preliminary, Second Estimate and Final).
